One of the few certainties of the 11-month-old Bulgarian Government of Prime Minister Boiko Borissov is that any initial announcement on an issue of note would be swiftly followed by an official regress.

Thus it was no surprise that Borissov's words to ambassadors of European Union countries to Bulgaria on June 11 – that Bulgaria was quitting the Bourgas-Alexandroupolis oil pipeline and shelving the Belene nuclear power plant – were followed by a clarification that the Cabinet had not yet made a final decision.

One year removed from the final stages of the parliamentary elections campaign, Borissov's stance on Belene remains unchanged, namely that the nuclear station could be built, but only if private investors can be found to shoulder the bulk of the financial burden. However, the way that message has been communicated, ranging between what appeared as a strong commitment to the project and fierce denials that state funds would be used for construction, has resulted in a perception that Bulgaria's Government was vacillant and lacking resolve.

Miscommunication
Borissov's main argument for scrapping the Bourgas-Alexandroupolis pipeline, finally agreed with Russia and Greece in 2007 after 13 years of intermittent negotiations, was the environmental uncertainty of the project. In 2009, the Cabinet ordered an international environmental impact assessment of the project, which could be completed as late as mid-2011.

The Prime Minister's unequivocal stance was reportedly met with disbelief just hours later by Economy Minister Traicho Traikov, who was quoted as saying that he was surprised by the words attributed to Borissov. But in defence of the Cabinet's stance, he cited the same arguments for delaying the construction of the one billion euro pipeline.

"It is clear that people are against Bourgas-Alexandroupolis and just as clear that we are doing everything to take that into account. The project is not being delayed through any fault of ours, but because an environmental impact assessment is under way," he was quoted as saying. Local referendums in resort towns on the Black Sea coast rejected the pipeline, with local residents repeatedly voicing concerns that any oil spill could endanger tourism, the region's most lucrative industry.

Later in the day, Borissov clarified his earlier statement, saying that he expected the environmental impact assessment to be unfavourable for the project. "Since the pipeline would cross the Natura 2000 [EU-protected areas], I do not see how any expert would defend the claim that there is no threat of an environmental disaster or that the environmental balance would be unaffected," Borissov said.

An unfavourable environmental impact assessment would allow the Cabinet to officially pull out of the project without having to pay damages for backing out, he said.

Greece owns 24.5 per cent in the future pipeline, the same as Bulgaria, but had no plans to quit the project. A government spokesperson said on June 11 that "the Greek side remains committed to the completion of this project and continues its efforts towards this direction". On June 22, deputy energy minister Yannis Manyatis was quoted as saying by Greek daily Naftemporiki that Athens would launch a "diplomatic initiative" to salvage the pipeline in "coming weeks".

Belene referendum
The oil pipeline is by far the smallest of Bulgaria's joint energy projects with Russia, paling in contrast to the planned nuclear power plant at Belene on the Danube River. Russia's Atomstroyexport has been contracted to build the two 1000MW reactors for four billion euro, but the final costs of building the station, including infrastructure, processing depleted nuclear fuel and the costs of financing the construction, are forecast to range between seven billion and 12 billion euro, according to competing estimates.

Despite Bulgaria's refusal to offer Budget guarantees after the withdrawal of Germany's RWE, picked to buy 51 per cent in the company that would build and operate Belene, the Russian contractor has put in orders for equipment. Should Bulgaria freeze construction, the Cabinet could be faced with a lawsuit for one billion euro in contract damages, Russian business daily Kommersant said on June 15, quoting sources familiar with the contract. On top of that, Bulgaria has already spent an estimated one billion leva to clear the site.

Having spent so much already and because it stood to gain "10 times the amount spent", Bulgaria should not give up on Belene, President Georgi Purvanov, one of the biggest supporters of joint energy projects with Russia, told television channel bTV on June 18.

He criticised Borissov's "lack of continuity" in pursuing energy policies and blamed the Cabinet for RWE's withdrawal from the project before suggesting that Belene's fate should be decided in a plebiscite.

Borissov, who was being interviewed on rival Nova Televiziya at the same time, agreed to the notion of a referendum, but defended the Cabinet's stance that the current contracts had to be amended. "At this time and at this price, the project is pointless. I am confident that we can lower the price and be able to sell the electricity," he said.

Taking a swipe at the previous socialist-led cabinet, Borissov said that he would not "enslave Bulgaria" by committing more funds to the project. Answering Purvanov's criticism that the Government was wasting the diplomatic efforts of its predecessors, Borissov said: "With all due respect to [Purvanov], why doesn't he produce seven billion for the project if he wants to be a good diplomat?"

According to Borissov, the Russian contractor was aware of Bulgaria's cost-cutting intentions, which were met with understanding.

The key test for the Cabinet's relationship with Atomstroyexport, a subsidiary of Russia's state-owned nuclear corporation Rosatom, would come at the end of September, when the company's contract with Bulgaria's power grid operator NEK for the preparation of the Belene site expires.

Atomstroyexport officials, quoted by Kommersant, said that the company was prepared to start construction work on October 1, provided that funding was available. Bulgaria, however, was yet to pick the consultants that would advise the Cabinet on the search for new investors.

South Stream detour
Bulgaria's third joint energy venture with Russia, the South Stream gas pipeline, was also increasingly in danger of falling short of expectations.

The two sides have made no progress in recent months on settling the issues that have shaken Bulgaria's commitment to the project. The main sticking point between Gazprom and Bulgaria remains the Russian giant’s insistence on treating the gas contracts renewal process as part of the negotiations on the amounts that Bulgaria would receive through South Stream. Bulgaria wants the issues examined separately and fears that bundling the issues could result in reduced quantities being pumped through Bulgaria to Greece, Macedonia and Turkey, which would mean lower transit revenue for Sofia.

Furthermore, Bulgaria has made no secret of its desire to eliminate the intermediaries through which Gazprom, which owns stakes in all three middleman companies, sells gas to Bulgaria. Gazprom, which traditionally prefers to do business through intermediaries, has rejected Sofia's pleas so far.

Surprisingly, however, the Russian giant appeared willing to make that concession for Romania, whose economy minister Adriean Videanu visited Moscow on June 17. Upon his return, Videanu said that a direct contract was possible once the current arrangements expire in 2012. "It will depend on how the two sides will co-operate until then," Videanu was quoted as saying by Evenimentul Zilei daily.

Gazprom chief executive Alexey Miller said in April that the underwater stretch of the pipeline would go ashore in Bulgaria, but the Russian company has launched a feasibility study to estimate the additional costs of beaching the pipeline on the Romanian coast, Kommersant said, quoting unnamed Gazprom sources. The study was expected to be completed by the autumn, when Miller would visit Bucharest to continue talks.

On June 17, Miller was quoted as saying: "We have had a very open and factual conversation. We have opened the issue of Romania's participation in South Stream."

Whether a ploy by Gazprom to soften Bulgaria's position or a legitimate alternative, Sofia's involvement in South Stream was its only leverage to negotiate better terms for its next gas deliveries contract, analysts have said.

South Stream can bypass Bulgaria entirely to deliver gas to Greece, provided an agreement with Macedonia is inked, a prospect raised by Miller on June 17, although that was likely to increase the costs of both the underwater and overland stretches of the pipeline.